Coca-Cola is buying Costa Coffee for $5 billion

The company has agreed to buy coffee chain Costa Coffee from UK drinks and hotels group Whitbread for £3.9 billion ($5.1 billion).

Costa has nearly 4,000 stores across 32 countries. It will give Coca-Cola (KO) “a strong coffee platform across parts of Europe, Asia Pacific, the Middle East and Africa, with the opportunity for additional expansion,” Coca-Cola said in a statement.

Besides its thousands of retail stores, Costa Coffee also has smaller on-the-go outlets called Costa Express, a roastery and for-home coffee products.

Whitbread, which acquired Costa in 1995, said it will use proceeds from the sale of the coffee business to expand its other big brand, Premier Inn hotels.

The deal still needs to get approval from shareholders and regulators, and is expected to be completed in the first half of 2019, the companies said.

Buying Costa puts Coke in direct competition with Starbucks (SBUX) and several other global coffee brands. Read More